2019 is the year of blockchain-boosted privacy

4 min read
From left: Gideon Lichfield (editor-in-chief at MIT Technology Review), Brian Behlendorf (executive director of Hyperledger Project), Dawn Song (professor at the University of California, Berkeley), Patrick Murck (co-founder of Bitcoin Foundation) at EmTech China 2019. (Image credit: EmTech China)

Data privacy may be one of the thorniest problems of the digital age, but many industries see immense potential in blockchain technology, investing billions in the hopes of finding solutions that can protect individuals’ information rights even as they facilitate new models of digital transactions.

“2019 will be the year of privacy,” Dawn Song, professor of Electrical Engineering and Computer Science at UC Berkeley, said as she addressed a room full of people at the 2019 EmTech China conference, held in Beijing from Jan. 19-22.

Although control over personal data is increasingly regarded as a basic human right, current regulations are still far from comprehensive enough to protect sensitive data. However, Song believes that more comprehensive privacy protection regulations will be put into place this year.

Valuable data is often siloed and not used to its full potential value because of privacy concerns, said Song. For the same reason, there is no marketplace for valuable data to be shared in a well-regulated and secure environment. But blockchain is changing the status quo.

Song’s blockchain project, Oasis Labs, is working on privacy-preserving technologies that leverage the power of blockchain. Oasis aims to build a platform that enables data consumers to access and use data via smart contracts, without getting an actual copy of the data. For example, one type of smart contract might enforce certain rules such that the data could only be used to train a machine-learning model and not be resold to other parties.

Song told TechNode in an interview that privacy-preserving technologies could be tremendously beneficial to financial services, especially in the areas of credit rating and fraud detection.

For example, every financial services provider has its own user database that could potentially be used to train machines in advance fraud-detection capabilities, but in many cases, the sensitive data cannot be accessed or shared due to privacy concerns, said Song. By the same token, lending services rely heavily on credit scores, which are also largely derived from mounds of valuable data, to make lending decisions.

Medical research is another example in which access to sensitive patient information and data is required to build sophisticated analytics and machine-learning models, she added.

Dawn Song, founder and CEO of Oasis Labs. (Image credit: EmTech China)

In order to utilize this data, we need to protect the privacy of users and make sure they can still maintain control over their own data. But in today’s data market, “once the buyer gets a copy of the data, even though there may be some contractual agreement, essentially there’s no technical way to enforce how the buyer actually uses the data,” said Song.

“I think we are going to see growth in big data, AI and machine-learning algorithms,” Brian Behlendorf, executive director of Hyperledger Project, told the audience. Echoing Song’s point, Behlendorf said that finding a way to tie information about consent and the rights to that data can help prevent massive privacy disasters.

Linux Foundation’s Hyperledger Project provides open-source blockchains as tools for industry players such as Chinese tech giants Alibaba Cloud, Tencent, and Baidu. Behlendorf mentioned that around 20% of the IP on Hyperledger’s open platform originates from contributors and developers in China.

Behlendorf said big data breaches result from the mentality of “collect everything and don’t worry about it.” However, there is a need to recognize that data is a liability as much as it is an asset. Many people have asserted that data is replacing oil as the world’s most valuable resource—and just like there are oil spills, there will be massive data  breaches, he said.

Patrick Murck, founding member of the nonprofit Bitcoin Foundation, said during the blockchain panel discussion that technology can play an important role in taking on the burden of enforcing these different rules in a data marketplace, automating them, and keeping track of them all.

Decentralized technologies, Murck said, could also solve the myriad problems that stem from the so-called “original sin of the internet”—the absence of a trust system that still requires valuable information, including money, to be intermediated by trusted third parties.

Without a decentralized payment method and with no way of paying for content that people created online, be it video clips, blog posts or articles, the internet inevitably rolled into today’s advertising model that we all know only too well.

Murck, however, is hopeful that permissionless technologies can help create micropayment systems that allow people to be fairly compensated. He pointed out that this is already happening in the form of Bitcoin, Plasma, and many other new payment channels.

Patrick Murck, founding member of the Bitcoin Foundation and member of IMF’s High-Level Advisory Group on Fintech. (Image credit: EmTech China)

Blockchain, Behlendorf believes, is a way out of the traditional network architecture which led to the creation of large centralized companies sitting at the center of business ecosystems.

What blockchain needs now might be what Behlendorf calls “minimum viable centralization,” a coordinated body establishing minimal guidelines to keep the system intact and to allow the technology to evolve and thrive.

“I believe this is a technology to help make markets harder to corrupt, harder for bad actors to get away with things that they can get away with in more centralized systems, and to make them more auditable,” said Behlendorf. “That’s what drew me in [to blockchain] where use cases are all about building verifiability, integrity, and fundamental business processes,” he said.

Brian Behlendorf, executive director of Hyperledger Project. (Image credit: EmTech China)